Clean energy stocks are likely to profit from the renewables boom, and these three stocks are set to capitalize on it in the long term.
Sunrun (RUN): Q1 earnings can reverse the current trend of the stock.
JinkoSolar (JKS): The world’s largest manufacturer of solar panels will undoubtedly benefit from a clean energy transition.
Vestas Wind Systems (VWDRY): Growth in wind energy and government contracts can make the stock profitable.
Clean energy stocks: Rows of solar panels are lined up around a center aisle.
Source: Shutterstock
Clean energy stocks will undoubtedly be profitable as the world transitions from Fossil fuels to clean renewable energy, and companies that develop these clean energy technologies are set to profit the most. Today, many of these companies are significantly undervalued, considering their prospects.
Despite some pushback from climate change skeptics, the truth is that governments will be pouring even more money into these companies to supplement a clean energy transition. Thus, this is a great time to have a stake in these companies for early profits.
In addition, massive investments in renewables are already taking momentum. Low carbon sources such as solar and wind energy are growing exponentially, and global energy transition investments have reached $755 billion in 2021.
Side-view of Sunrun (RUN) company trucks in their warehouse
Source: Ajinkya Kolhe / Shutterstock.com
Sunrun (NASDAQ:RUN) provides solar panels and batteries to residences, and it can be a great long-term investment but risky in the short term. At its current state, the stock seems undervalued as it is more than 75% down from its previous high.
Moreover, the company has more to do in terms of net income, and has to regain its revenue growth momentum. In the fourth quarter of 2021, the company reported an annual $80 million loss. In addition, the year-on-year (YoY) quarterly revenue growth slowed from 109.5% to 35.94%. The slowdown is likely the primary reason for the stock’s decline. However, in the first quarter of 2022, the company reported a 39% jump in customer orders, after which shares jumped 11%.
Therefore, I consider Sunrun to be profitable in the long term as it can become a major supplier of solar energy to the private sector. Moreover, the stock is likely bottoming out and reversing if the market trends do not become too bearish. It is difficult to predict the short-term value for RUN as the company just released its Q1 earnings. Still, the company’s Q1 earnings are better than expected, and the stock can be very profitable, especially in the long term.
Jinko Solar (JKS)
The JinkoSolar (JKS) logo displayed on a plain white wall.
Source: Lutsenko_Oleksandr / Shutterstock.com
Jinko Solar (NYSE:JKS) is the one of the world’s largest solar manufacturer and is set to gain a lot from the clean energy boom. The stock seems to be in a stable long-term uptrend, only facing a significant crash in March 2020.
The first-quarter results of the company were also satisfactory. The company reported YoY revenue growth of 86% this quarter, and quarterly shipments are up by 57%. It also became the first company to deliver 100 GW of solar panels.
I expect this stock to perform well in the long term due to its scale and influence. The company is a top supplier of solar panels, and it is going to benefit from a clean energy transition directly. Thus, it is likely to be among the top performing clean energy stocks.
Vestas (VWDRY)
A wind turbine appears in silhouette against a bright orange and blue sky.
Source: Khanthachai C / Shutterstock.com
Founded in 1945, Vestas Wind Systems (OTCMKTS:VWDRY) is a major wind turbine manufacturer. The company has so far supplied the U.S and Canada with more than 42,000 MW of turbines.
However, Vestas should be seen as a long-term investment. I expect more losses for the stock in the immediate short term due to the broader economy. The stock was also significantly overvalued after the Covid-19 pandemic market turmoil, as the stock surged 267%-plus in less than a year. Although it has now declined to fairer prices, investors should still be careful as there aren’t any signs of a reversal.
In addition, wind energy is unlikely to be a feasible choice for residential power as a lot of space is required to be more effective than solar. Wind energy is also very unpredictable, and that is not a great use case for residential power generation. Therefore, Vestas is more reliant on government contracts and investments than the private sector.
However, Vestas is still a good investment due to the growth in wind energy. In the U.S., wind energy still dominates when it comes to renewable energy. In fact, 46% of electricity generation from renewable energy comes from wind, and it is unlikely to slow down anytime soon.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
